Marketplace - Clock starts on TikTok ban

Episode Date: April 24, 2024

Today, President Joe Biden took a decisive step by signing a bill that could ban TikTok in the U.S. unless its Chinese owner, ByteDance, divests from the company within nine months. This move echoes a long history of limiting foreign ownership of communications companies, dating back to the founding of this country. Also in this episode: Boeing’s financial woes, the NBA’s media bidding war and New England’s free college frenzy.

The effort to keep other countries out of our conversations online and off is way older than this TikTok fight. From American public media, this is Marketplace. In Washington, I'm Kimberly Adams in for Kai Rizdal. It's Wednesday, April 24th. Good to have you with us. As you've no doubt heard at this point, today, President Joe Biden signed into law a $95 billion foreign aid package, including a provision that would force the owner of TikTok to sell

the video app or see it banned in the United States. The app's Chinese parent company, ByteDance, now has several months to complete a sale. In response, TikTok called the measure unconstitutional and says the company will challenge it in court. Now, it's not every day Congress takes aim at a specific foreign-owned company over national security concerns.

But limiting ownership of firms in the U.S., especially in telecommunications, has a long history, as Marketplace's Henry Epp reports. By long history, we mean like all the way back to the founding of the United States, says Zephyr Teachout, a professor at Fordham Law School. The focus and anxiety about foreign corruption and foreign powers is really central at the constitutional convention. The founders, she says, were really concerned that foreign countries would try to meddle in the U.S. So they passed measures including the emoluments clause, which prohibits officeholders from taking gifts from foreign officials. Over the decades, the government restricted foreign businesses from taking part in energy, shipping, and telecommunications. In 1912, the Radio Act was passed, which prohibited foreign ownership of radio stations.

And that really became a model for other communications infrastructure. The idea, TeachOut says, was to prevent foreign actors from using mass communication to do two things. Spying on the one hand and propaganda on the other. Those are the same concerns lawmakers now have about ByteDance, the Beijing-based owner of TikTok, says Ganesh Sitaraman at Vanderbilt Law School. It really matters who owns the basic communications infrastructures of our country. And tech platforms are one of the central ones in the modern era. But what's unusual in this case is it's congress spelling out who can own a specific

company. Usually that's left to a government body called the Committee on Foreign Investment in the United States or CFIUS says James Lewis at the Center for Strategic and International Studies. CFIUS can block a sale but they can also say okay we'll let you operate this American company but you need to do the following things. CFIUS had been looking into TikTok, but Congress's action overrides that work. Now, with the U.S. giving the company a matter of months to sell off the algorithm at the heart of the app and the Chinese government pushing back. We've set ourselves up for a head on collision. It's a bit like a game of chicken.

And the real test here is the algorithm. Who gets the algorithm? And that fight, Lewis says, does not have a historical precedent. I'm Henry Epp for Marketplace. Bit of a waiting game on Wall Street today ahead of tomorrow's GDP report. We'll have the details when we do the numbers. Boeing shared its first quarter earnings report today, and despite the disastrous Alaska Airlines flight earlier this year and the ensuing public scrutiny, the report wasn't as bad as many expected. Revenue came in slightly higher than forecast, but still down 8% from the year before.

That's the first drop in seven quarters. The company, which has been around since 1916, is struggling. And with a history that long, it raises the question of how Boeing ended up here. Jerry Youseam wrote about Boeing and what he calls the dark age of American manufacturing for the Atlantic. Jerry, welcome to the program. Hello, thanks for having me. You open your piece with a pretty stark comparison of Boeing of the past and Boeing of more recent days.

Can you lay that out for me? Well, the comparison is a stark one in that early in Boeing's existence, it paid very close attention to the process of manufacturing. And the original founder, Bill Boeing, had his office right in the building adjacent to the shop floor and would often stroll over, inspect individual pieces. And what we've arrived at now is a situation where management of Boeing is very much detached

from the actual building of its planes. Can you briefly sort of take me through the timeline of Boeing, of how they went from this super prestigious company that was doing everything in-house, had all of its engineers very plugged into what was going on, to what we're learning as these investigations continue about such a disparate chain of events that led to the door blowing out on the plane and things like that. The timeline is kind of a long one.

I think it was in the early 2000s that a lot of the key decisions were made. And airplanes are that kind of business where the errors of yesterday take a long time to show up. But it was around 2005 that they really got serious about what they called offloading. And this meant doing less and less of the work in house, you know, for some of its planes having the wings built elsewhere, having the entire tail section built elsewhere.

But they took this further and further. And I'd say prior to the accidents, it was beginning to recognize it had taken this too far and was beginning to sort of reintegrate and try to make some steps to bring itself back to kind of its engineering manufacturing roots. How common is what Boeing has done in the rest of American manufacturing? I think it's actually not uncommon. It's a very visible case for what I think has been a fairly pervasive phenomenon. I mean, as recently as the early 2000s, Intel was seen as the absolute last word in manufacturing prowess.

And its CEO frankly admitted that it lost its edge on the shop floor. And they've pronounced what he's called a death march to get back to leadership and the actual process of making things better, ensuring quality, et cetera. Yeah. of making things better, ensuring quality, etc. Yeah, one of the issues you point to in American manufacturing is that power in these companies, like Boeing, moved from engineers to financial managers. How did that happen and what's been the consequence? It was the engineers who first were sort of in charge of the executive suite when the American corporation came to

be. Henry Ford and Bill Boeing, these were people who had arose from the shop floor. And over time, it's been pretty well documented that the CEO class came to be populated by people out of the finance function, which just meant they spoke the language of numbers and accounting. They didn't speak the language of engineering. And so those best equipped to understand how to put things together were no longer in charge.

And I think that's a process that's now gone too long, gone too far. Yeah, what's the lesson for other American manufacturers to take from this situation not just you know what Boeing is doing right now but how Boeing got to this point? I think the lesson is ignore the the process of making at your peril. You know a lot of people have set up the Boeing story as sort of a case of a company that's put costs in front of quality.

But the thing is, really what they've done is actually made it more expensive for themselves. I mean, they've had their production line shut down. It's extremely costly. So you've got to find sustainable ways to keep on driving costs down, keep on improving quality. So it's a matter of are you going to do it bluntly by getting rid of your experienced workers, your advanced machine tools, and the managerial attention required to make those sort of continual improvements or are

you going to lean into it? All right. We'll end it there. Jerry, you seem writing about Boeing and the quote dark age of American manufacturing for the Atlantic. Thank you so much. Thank you. Switching to the business of sports for a bit now, the bidding war for rights to air the NBA's 2025 season and beyond is officially on. The window for ESPN and TNT to extend their exclusive deals with the league closed this week without a final agreement. Now those legacy media companies have to face competition for the rights worth tens of

billions of dollars with streamers like Amazon Prime Video, Apple TV Plus and Netflix, who are all eager to expand their live sports offerings. Marketplace's Savannah Marr has more. Live sports is one of the last things keeping many fans from cutting the cord. But leagues can't afford to keep living on cable, says David Offenberg, a professor at Loyola Marymount University. Most of my students have never had cable in their homes. Offenberg says the migration to streaming is about meeting younger fans where they are. Streaming is the only way to reach those viewers and to keep their sport relevant. That's worth a lot to the NBA, and so are the billions of dollars at stake. And for streaming companies struggling to retain fickle subscribers in a crowded market.

Sports fans are pretty loyal. Analyst Ross Benish with eMarketer says one way to capture that loyalty for a good chunk of the year is to have their favorite league on. But leagues like the NBA can't abandon cable holdouts. Mike Prue with Forrester says that's mostly older folks who will never make the switch to streaming. We are in the messy middle right now. Prue expects the NBA to strike deals with a mix of legacy media and tech companies.

Over the next couple of years, we're going to continue to exist in this hybrid format. Where rights could also be broken up among multiple streamers. Let's say Amazon Prime Video gets the NBA regular season, except Tuesday Night Games, which go to TNT and HBO Max. And maybe you've got to subscribe to Netflix to watch the in-season tournament. Ross Benish with eMarketer says if you're looking to stream multiple leagues, Trying to watch all of them, you would need like a whole publication dedicated on telling you where to watch what. which might have some fans feeling nostalgic for their cable subscription.

I'm Savannah Marr for Marketplace. In New England, a couple of states have started offering free community college. There's a relatively new program in Maine for high school graduates and one in Massachusetts where residents who are 25 and older can get free tuition. The thing is, these programs turned out to be way more popular than state leaders bargained. At some campuses enrollment is up more than 13%. This jump comes as many community colleges lost a lot of staff to retirement and better paying jobs after the pandemic. So all these new students

are overwhelming the system. WBUR's Carrie Young has more. Friday afternoons at the Mount Wachusett Community College in north central Massachusetts are affectionately known as FAFSA Friday. Community outreach counselor Cassie Peltola says this is a time when prospective students can get help applying. But because you don't already have an associate's degree, that means you are eligible for Mass Reconnect. Mass Reconnect is the free community college program

the state launched last fall. To qualify, students have to apply for federal financial aid. And Paltola says that's made FAFSA Fridays hectic. Things have been getting busier and busier as the semester goes on. Mass Reconnect covers community college tuition for adults 25 and older who don't already have a degree. 27-year-old Ryan Souleir says the tuition help has been huge.

It just allowed me to switch to part-time at my job, and that helps me be able to get my homework done more easily and stuff. It's less stressful. This program has been incredibly popular. Enrollment at Mount Wachusett last semester was up by about 12 percent from 2022. Statewide, it's up 8 percent, according to the Massachusetts Department of Higher Education. North Shore Community College Dean of Enrollment Services Jason Marsala says the influx of students has been a double-edged sword. For students, it can be life-changing. But for staff? If you're the person who has to make all the adjustments and fix all the accounts and follow all the money,

it's made your life super difficult right now. It doesn't help that many community colleges have been slowly losing staff for a few years. Many left higher education after the pandemic. And while it might seem like more students would translate to more money for the school, it doesn't often work out that way. Like most other states, Massachusetts community colleges get less state funding per student than four-year public universities. Up the road in Maine, community colleges are also struggling with the enrollment surge. We anticipated and frankly budgeted for 8,000 new students. We're up to 12,625 students.

David Daigler is the president of the Maine Community College System. We can't underestimate the pressure that the faculty find them, and they now have full classrooms. It is common to see an enrollment bump when a state or city offers free community college. John Fink is with the Community College Research Center at Columbia. He says the increase probably feels more dramatic in Maine and Massachusetts because enrollment reached historic lows during the pandemic. So I think it's encouraging, but to some extent not surprising that there's a lot of folks out there in communities that with the offer of free tuition, they're going

to come back to the community colleges. Fink hopes states extend their investments beyond tuition so colleges have adequate faculty and staff that can support students. To make sure that students aren't just getting in but getting through. In Massachusetts, state leaders say they hear that. Noe Ortega is the commissioner of higher education. This is a year of learnings, I would say. I do think that what we need to pay close attention to is what kind of capacity are we going to need to build out. Because, he says, Massachusetts wants to keep offering

free tuition. There's about 20% more funding for the program in next year's budget proposal, including dollars for college staffing increases. If that goes through, Ortega hopes it will make a difference. In Boston, I'm Kari Young for Marketplace. Coming up... This is the best sauerkraut in town. I'd buy the big bucket, except for I want the purple stuff.

A new way to buy and sell local. But first, let's do the numbers. The Dow Jones Industrial Average fell 42 points, a tenth of a percent, to end at 38,460. The NASDAQ rose 16 points, a tenth percent, to close at 15,712. And the S&P 500 was up one point, just a tad, to finish at 5071. We were talking earlier in the show about Boeing. It gave back 2 and 9 tenths percent today on first quarter revenue that beat analysts expectations. European rival Airbus was off 3 tenths of a percent. Texas Instruments shot up 5 and 6 tenths percent. The chipmakers quarterly earnings and revenue also beat expectations. Micron technology dipped 6

tenths percent%, NVIDIA slipped 3.3%. Bonds fell, the yield on the 10-year T-note rose to 4.64%, and you're listening to Marketplace. This is Marketplace, I'm Kimberly Adams. This week the Centers for Medicare and Medicaid Services finalized a rule setting new minimum staffing requirements for nursing homes. Once the rule is fully phased in, nursing homes that get federal funding from Medicaid and Medicare will have to have enough nurses and nursing assistants on hand to be able to give at least three and a half hours of

care to each resident every day. They'll also be required to have a registered nurse on call at all times. Marketplace's Samantha Fields reports. Until now, the only staffing rule for nursing homes has been that they have sufficient staff without specifying what that means. This is the biggest reform in nursing home policy in decades. David Grabowski at Harvard Medical School says many nursing homes have been understaffed for years, but especially since the pandemic.

We've seen some really gross examples of this where facilities with low staffing have put resident lives in danger. This is going to, for the first time, set up a floor that nursing homes can't staff below. That's the aim, anyway. And Priya Chidambaram at the health policy non-profit KFF says it's important. Adequate staffing in nursing homes is proven to be one of the measures that's most strongly associated with higher quality of care. But she says a recent KFF study found only about

19 percent of nursing homes currently meet all the new requirements and many say it's going to be hard to comply. We have no dispute with the goal of quality. We fully embrace that. Katie Smith Sloan runs LeadingAge, an association of nonprofit nursing homes and other aging services. But we believe that a mandate like this should be preceded by a government-supported effort to attract, incentivize, and train registered nurses and aides because we currently have a severe shortage. Federal and state support will be key to addressing that shortage, says Jasmine Travers at NYU's College of Nursing. It's one thing to implement the minimum staffing standards, but really being able to recruit the people in these positions and not let it be an unfunded mandate.

That's going to be important. The Centers for Medicare and Medicaid Services says it plans to put $75 million toward recruiting and incentivizing nurses to work in nursing homes. I'm Samantha Fields for Marketplace. All 50 states have some sort of cottage food law which allows the average person to say sell things like homemade brownies at a school fundraiser without having to go through a food inspection. But some states are expanding beyond the bake sale when it comes to what kinds of foods can be sold this way. For example,

in Wyoming, new local stores are giving farmers another venue to sell their vegetables, fruits, and meat. Wyoming Public Radio's Hannah Haberman has more. Up on a little hill just outside the small town of Lander, Wyoming, two pigs munch on bits of sourdough bread near stacks of hay bales. These are some of the luckier pigs in the county. That's Anna Schmetz, a local farmer. They have access to

some corn but they're raised mostly on scraps from the local restaurants, so extras from the bakery, the Chinese restaurant in town. Schmetz has been a farmer and rancher for 12 years and now she has a new way to access consumers. Meadowlark Market, a new local food store a couple miles down the road. The market is in an airy brick building on Main Street. It's opening day in shoppers' browse shelves stocked with locally made crusty baguettes and bushels of fresh basil. And in the freezer, lamb, chicken, pork. I really love good meat, well-grown meat, and I love lamb, which is not easy to find

in our Safeway. That's Zuzabedient. She's perusing a display of seasonings on a long wooden table in the center of the room. She lives just a couple blocks away. I'm very excited that it's easy to get here and affordable. Meadowlark is designed to be a year-round one-stop shop for customers. Melissa Hemkin helped start the store and says it's easy for producers, too. Provides them a lot more flexibility. They may have young kids, they gotta go feed both cows. They don't need to be here to sell their product. Hemkin runs a poultry hatchery four miles outside of town and has a full-time

job at the local community college. And I don't have time to run an egg route. I get requested a lot for eggs but I'm not able to deliver or really even set a time off to that where I'll be home for eggs, but I'm not able to deliver or really even set a time off to not well be home for eggs. Humkin says farmers markets are a great place to meet customers, but they're typically only once a week. And it's a lot of work to set up and break down a booth. Being able to sell her products at the store is a real time saver.

Metalark will just make it way easier. I can just say, hey, go down to Metalark. Whatever I have available is down there. This kind of space is possible because of the Wyoming Food Freedom Act. Under the law, producers can sell a wide range of foods without licenses or certifications, as long as the consumer is properly informed about the food source.

That's a big difference from most typical cottage food laws, which are often restricted to things like breads, jams, and baked goods. And a 2023 amendment to the Wyoming law now allows for a store like Meadowlark to serve as what's called a designated agent to sell these products. Meadowlark never purchases it. They just hold it in their space and then they're the designated agent to sell it for me as a producer.

The market takes up to a 25% commission from all sales. Pemkin says Metal Arc also has a commercial kitchen that producers can rent. As the businesses are looking to scale up, they can't fit anymore in their home kitchen, or they just need to separate family and business a little bit. They can come here for whatever hours they need.

A cucumber farmer could come here to pickle, or a dairy producer could use the kitchen to make yogurt. The commercial certification then allows the farmer to sell that product to bigger grocery stores. As customer Suze Bedient checks out, she's excited about all her finds. But she says there was one product missing. She loves Farmer Fred's sauerkraut, but there's only the green cabbage version for sale right now.

This is the best sauerkraut in town. I'd buy the big bucket, except for I want the purple stuff. She says that's all the more reason to come back again soon. In Lander, Wyoming, I'm Hannah Haberman for Marketplace. This final note on the way out today, since we were talking about Boeing earlier in the show, we'll close out with this other bit of aviation news today. The Biden administration rolled out new rules to get flyers more refunds more quickly when flights are delayed or cancelled and get those refunds in cash, not vouchers or travel credits. The new guidelines also require more disclosures of baggage and change fees. Doesn't do much about how small the seats are, though.

Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torado, and Becca Weinman. Jeff Peters is the manager of media production, and I'm Kimberly Adams. We'll be back tomorrow. This is APM. The world can be a confusing place for kids, and finding the words to explain it all can be tricky too. Introducing Million Bazillion, a webby-winning podcast from Marketplace that takes your kids on exciting adventures to answer the awkward and complex questions they have about money. Each week we tackle hard hitting inquiries from kid listeners like, What is a college account and how does it work?

I want to know what unions are and what they are for. Why does the US have so much gold in Fort Knox and what do they use it for? Help your kids understand how money fits into the world around us. Listen to Million Bazillion wherever you get your podcasts.